[Federal Register Volume 79, Number 217 (Monday, November 10, 2014)]
[Rules and Regulations]
[Pages 66617-66621]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2014-26498]
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DEPARTMENT OF LABOR
Employee Benefits Security Administration
29 CFR Part 2520
RIN 1210-AB66
Revisions to Annual Return/Report--Multiple-Employer Plans
AGENCY: Employee Benefits Security Administration, Labor.
ACTION: Interim final rule with request for comments.
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SUMMARY: This interim final rule describes revisions to the Form 5500
Annual Return/Report of Employee Benefit Plan and Form 5500-SF Annual
Return/Report of Small Employee Benefit Plan (together ``Form 5500
Annual Return/Report'') to implement annual reporting changes for
multiple-employer plans required by The Cooperative and Small Employer
Charity Pension Flexibility Act (CSEC Act), enacted on April 7, 2014.
The Form 5500 annual return/report is filed by employee benefit plans
under the Employee Retirement Income Security Act of 1974 (ERISA) and
sections 6047(e), 6057(b), 6058(a), and 6059 of the Internal Revenue
Code (Code). The CSEC Act established additional annual reporting
requirements for multiple-employer plans for plan years beginning after
December 31, 2013, by adding new section 103(g) to Title I of ERISA.
Specifically, the annual return/report of a multiple-employer plan must
include a list of participating employers and a good faith estimate of
the percentage of total contributions made by each participating
employer during the plan year. This interim final rule also includes
findings by the Department of Labor (Department) under the
Administrative Procedure Act that good cause exists to adopt these
revisions on an interim final basis without prior notice and public
comments.
DATES: Effective Date. This interim final rule is effective on November
10, 2014.
Comment Date. Comments are due on or before January 9, 2015. We
will consider public comments in connection with publishing a final
rule that would apply no earlier than the 2015 Form 5500.
Applicability Dates. The multiple-employer plan reporting
requirements under the CSEC Act apply to plan years beginning after
December 31, 2013, which created an immediate need for changes to the
Form 5500 and Form 5500-SF. Accordingly, the CSEC Act form changes in
this document will be applicable beginning with the 2014
[[Page 66618]]
Form 5500 Annual Returns/Reports filed for plan years beginning after
December 31, 2013.
ADDRESSES: Written comments may be submitted to any of the addresses
specified below. All comments will be made available to the public.
Warning: Do not include any personally identifiable information (such
as name, address, or other contact information) or confidential
business information that you do not want publicly disclosed. All
comments are posted on the Internet exactly as received, and can be
retrieved by most Internet search engines. No deletions, modifications,
or redactions will be made to the comments received, as they are public
records. Comments may be submitted anonymously.
Comments to the Department of Labor, identified by RIN 1210-AB66,
by one of the following methods:
Federal eRulemaking Portal: http://www.regulations.gov. Follow the
instructions for submitting comments.
Email: [email protected] with Subject Line: RIN 1210-AB66--CSEC Act
Form 5500 Interim Final Rule.
Mail or Hand Delivery: Office of Regulations and Interpretations,
Employee Benefits Security Administration, Room N-5655, U.S. Department
of Labor, 200 Constitution Avenue NW., Washington, DC 20210, Attention:
RIN 1210-AB66--CSEC Act Form 5500 Interim Final Rule.
Comments received by the Department of Labor will be posted without
change to http://www.regulations.gov and http://www.dol.gov/ebsa and
made available for public inspection at the Public Disclosure Room, N-
1513, Employee Benefits Security Administration, 200 Constitution
Avenue NW., Washington, DC 20210.
FOR FURTHER INFORMATION CONTACT: Mara S. Blumenthal, Employee Benefits
Security Administration, U.S. Department of Labor, (202) 693-8523, for
questions relating to this document. Note that this is not a toll-free
number.
Customer service information: Individuals interested in obtaining
information from the Department of Labor concerning the Employee
Retirement Income Security Act may call the EBSA Toll-Free Hotline at
1-866-444-EBSA (3272) or visit the Department of Labor's Web site
(www.dol.gov/ebsa).
SUPPLEMENTARY INFORMATION:
I. Background
A. Form 5500 Annual Return/Report
Section 103 of ERISA, 29 U.S.C. 1023, and the regulations issued
under that section, impose annual reporting and filing obligations on
pension and welfare benefit plans, including multiple-employer plans.
Plan administrators, employers, and others generally satisfy these
annual reporting obligations by the filing of the Form 5500 Annual
Return/Report of Employee Benefit Plan or Form 5500-SF Annual Return/
Report of Small Employee Benefit Plan, including any required schedules
and attachments, (together ``Form 5500 Annual Return/Report''), in
accordance with the instructions and related regulations.
The Form 5500 Annual Return/Report is the principal source of
information and data available to the Department, the Internal Revenue
Service (IRS), and the Pension Benefit Guaranty Corporation (PBGC)
concerning the operations, funding, and investments of pension and
welfare benefit plans. The Form 5500 Annual Return/Report constitutes
an integral part of each Agency's enforcement, research, and policy
formulation programs, and is a source of information and data for use
by other federal agencies, Congress, and the private sector in
assessing employee benefit, tax, and economic trends and policies. The
Form 5500 Annual Return/Report also serves as a primary means by which
plan operations can be monitored by participants and beneficiaries and
by the general public.
B. Cooperative and Small Employer Charity Pension Flexibility Act and
Additional Reporting Requirements for Multiple-Employer Plans
The Cooperative and Small Employer Charity Pension Flexibility Act
(CSEC Act), Public Law 113-97, 128 Stat. 1101, enacted on April 7,
2014, amended the funding rules for pension plans that are maintained
by certain cooperatives or charities. In addition, the CSEC Act created
additional annual reporting requirements for multiple-employer plans
covered by Title I of ERISA. Specifically, section 104(c) of the CSEC
Act amended section 103 of ERISA to require in section 103(g) that
annual reports of multiple-employer plans include ``a list of
participating employers'' and, with respect to each participating
employer, ``a good faith estimate of the percentage of total
contributions made by such participating employers during the plan
year.'' \1\ These additional reporting requirements apply generally to
a multiple-employer plan regardless of whether the plan is affected by
the modifications to the minimum funding requirements made by the CSEC
Act.\2\ The effective date provisions in section 3 of the CSEC Act make
these new annual reporting requirements applicable for plan years
beginning after December 31, 2013.
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\1\ The Government Accountability Office also recommended that
the Form 5500 be used to collect information about participating
employers in multiple employer plans. See GAO Report to the
Chairman, United States Senate Committee on Health, Education,
Labor, and Pensions, entitled ``PRIVATE SECTOR PENSIONS: Federal
Agencies Should Collect Data and Coordinate Oversight of Multiple
Employer Plans,'' GAO 12-665 (Sept. 2012).
\2\ This document is limited to the annual reporting changes
required by section 104(c) of the CSEC Act and does not address
possible guidance on completing the Schedule SB to reflect
modifications to the minimum funding requirements made by the CSEC
Act for multiple-employer plans affected by those modifications.
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The CSEC Act did not define the terms included in the new annual
reporting requirement or otherwise explain the purpose or objectives of
the requirement. In light of the fact that the CSEC Act directed
changes to Form 5500 reporting, the Department believes that it is
appropriate to use existing Form 5500 definitions and requirements to
implement the CSEC Act changes. This approach will also allow the
Department to establish a uniform way for plan administrators and
employers to comply with reporting requirements and ensure that
consistent information about participating employers in multiple-
employer plans is available to the public as part of the Form 5500
information collection.
In order to implement the CSEC Act requirements in a timely
fashion, this interim final rule changes the Form 5500 and Form 5500-SF
generally for plan years beginning after December 31, 2013. First,
certain conforming revisions to Part I (Annual Report Identification
Information) of the Form 5500 Annual Return/Report are being made to
enable multiple-employer plans to comply with the new requirements
imposed by section 104(c) of the CSEC Act. Specifically, Part I, line
A--Multiple-Employer Plan, of the Form 5500 and Form 5500-SF currently
provides a box to check if the Form 5500 or Form 5500-SF is being filed
for a multiple-employer plan. A parenthetical is being added next to
the box that tells filers checking the box that they must attach a list
of participating employers and related information and directs them to
the form instructions for further information and directions on the
filing requirements for the attachment.
The instructions to the Form 5500 and Form 5500-SF for that box are
also being amended to include information and specific directions on
completing and filing the required attachment. The instructions to the
Form 5500 and Form
[[Page 66619]]
5500-SF will now provide that the Annual Return/Report filed for a
multiple-employer plan must include an attachment that identifies the
participating employers in the plan by name and employer identification
number (EIN) and includes for each participating employer an estimate
of the percentage of the contributions made by each employer (including
employer and participant contributions) relative to the total
contributions made by all participating employers during the plan year.
This attachment, entitled ``Multiple-Employer Plan Participating
Employer Information,'' supplements and does not replace other Form
5500 filing requirements that apply to multiple-employer plans.
For purposes of defining the employee benefit plans subject to the
CSEC Act reporting requirement, the interim final rule uses the
existing definition of ``multiple-employer plan'' in the instructions
for the Form 5500 Annual Return/Report. Specifically, a multiple-
employer plan in this context is a plan that is maintained by more than
one employer and is not a ``single employer plan'' or a ``multiemployer
plan'' for Form 5500 filing purposes.\3\ Multiple-employer plans can be
collectively bargained and collectively funded, but if covered by PBGC
termination insurance, they must have properly elected before September
27, 1981, not to be treated as a multiemployer plan under Code section
414(f)(5) or ERISA sections 3(37)(E) and 4001(a)(3), and have not
revoked that election or made an election to be treated as a
multiemployer plan under Code section 414(f)(6) or ERISA section
3(37)(G). A plan is treated as a single-employer plan for Form 5500
purposes if all of the employers maintaining the plan are members of
the same controlled group or affiliated service group under Code
sections 414(b), (c), or (m). See Form 5500 and Form 5500-SF
Instructions for Line A--Box (available at www.dol.gov/ebsa/5500main.html#2013).
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\3\ Unlike the Form 5500, which excludes multiple employer plans
from the definition of single-employer plans, ERISA section 3(41)
defines all plans, with the sole exception of multiemployer plans,
as single-employer plans. The Form 5500 multiple-employer plan
definition is the relevant definition for purposes of this interim
final rule.
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Although the CSEC Act was focused on amendments to the funding
rules for certain defined benefit pension plans, the annual reporting
amendment to section 103 of ERISA did not limit the new reporting
requirement to defined benefit pension plans. Rather, the new
requirement applies generally to ``any multiple-employer plan.''
Accordingly, the interim final rule adds instructions for the Form 5500
and Form 5500-SF requiring all multiple-employer plans (defined benefit
pension plans, defined contribution plans, and welfare plans) required
to file the Form 5500 or Form 5500-SF to include with their annual
report the new ``Multiple-Employer Plan Participating Employer
Information'' attachment. The form instructions further provide that
welfare plans that are exempt under 29 CFR 2520.104-44 from the
obligation to file financial statements with their annual report are
required to include a ``Multiple-Employer Plan Participating Employer
Information'' attachment, but are permitted to report only a list of
participating employers in the attachment filed with their Form 5500
Annual Return/Report.
The CSEC Act required information to be reported on ``participating
employers.'' That term, however, was not defined in the CSEC Act, and
it is not otherwise defined in Title I of ERISA or used elsewhere in
ERISA section 103 or the Department's regulations implementing the
ERISA annual reporting requirements. However, the Department has used
the term ``participating employer'' in other contexts generally to
describe employers that are obligated to make contributions to a plan,
made contributions to the plan, or whose employees are covered under
the plan. See, e.g., DOL Advisory Opinion 81-44A. The Department uses a
similar concept in its regulation on content requirements for summary
plan descriptions (SPD), 29 CFR 2520.102-3. Specifically, 29 CFR
2520.102-3(b)(4) requires that the SPD of a plan established or
maintained by two or more employers must contain a statement that a
complete list of the employers sponsoring the plan may be obtained by
participants and beneficiaries on request and a statement that the list
is available for examination by participants and beneficiaries at the
plan administrator's office. The term ``sponsoring employer'' includes
employers that are obligated to make contributions to a plan or whose
employees are covered under the plan. Accordingly, because employee
benefit plans must maintain a list of employers that are obligated to
make contributions to the plan or whose employees are covered under the
plan, the Department believes that interpreting the term
``participating employer'' to include all employers that are obligated
to make contributions to the plan, that make contributions to the plan,
or whose employees are covered under the plan would be consistent with
the CSEC Act annual reporting changes and the least burdensome
alternative for filers.
In addition to requiring disclosure of a list of participating
employers, the CSEC Act requires ``a good faith estimate of the
percentage of total contributions made by such participating employers
during the plan year.'' In the case of many employee benefit plans, in
addition to employer contributions, participants (and in some cases
beneficiaries) may pay amounts to the employer for contribution to the
plan and the employer may withhold amounts from wages or other
compensation for contribution to the plan. Under Title I of ERISA, the
Department generally classifies such contributions as ``employee
contributions'' or ``participant contributions,'' while under the
Internal Revenue Code such contributions may be classified for some
purposes as ``employer contributions.'' The Form 5500 Annual Return/
Report generally follows the Title I classification system and includes
several distinct reporting requirements that call for employer and
participant contributions to be accounted for and reported separately.
The Department believes that the CSEC Act should be interpreted
consistently with existing Form 5500 Annual Return/Report requirements
regarding contributions and require that multiple-employer plans
include both employer and participant contributions in calculating the
percentage of each employer's contributions relative to those made by
all participating employers. Particularly in the case of defined
contribution and welfare plans, requiring reporting of both employer
and participant contributions will help the Department better
understand the role of each participating employer in the overall
funding of the plan.
The Department similarly believes the ``during the plan year''
concept should be interpreted consistent with other financial reporting
requirements on the Form 5500 Annual Return/Report. The instructions
for the Form 5500 Annual Return/Report allow filers to report financial
information using ``the cash, modified cash, or accrual basis for
recognition of transactions, as long as you use one method
consistently.'' A literal interpretation of the phrase ``during the
plan year'' might suggest that Congress intended that the CSEC
percentage calculation be done using a cash basis. There is nothing in
the CSEC Act, however, that indicates that Congress intended to impose
such a burden on plans that currently use an accrual approach to
measuring contributions for the plan year. In fact, elsewhere in the
Form 5500 the
[[Page 66620]]
Department has used the terms ``during the plan year'' and ``for the
plan year'' interchangeably in a way that allows plans to use cash or
accrual approaches to recognizing contribution amounts. Specifically,
the Schedule R requires that multiemployer plans report the dollar
amount contributed by each employer that contributed more than five
percent (5%) of total contributions to the plan ``during the plan year
(measured in dollars).'' The instructions state that the plan should
enter information for any employer that contributed more than five
percent (5%) of the plan's total contributions ``for the plan year.''
Accordingly, in the Department's view, it is an appropriate reading of
the CSEC Act requirements to allow filers to use the same method (cash,
modified cash, or accrual) for calculating the good faith estimate that
they use for recognizing other financial transactions on the Form 5500
Annual Return/Report.
II. Good Cause for Exemption From Public Notice and Comment and
Immediate Effective Date
To issue an interim final rule without prior public notice and
comment, an agency must find good cause that notice and comment are
impracticable, unnecessary, or contrary to the public interest. 5
U.S.C. 553(b). To issue a rule that is immediately effective, an agency
similarly must find good cause for dispensing with the 30-day delay
required by the Administrative Procedure Act (APA). The multiple-
employer plan reporting requirements under the CSEC Act apply to plan
years beginning after December 31, 2013, thus creating an immediate
need for changes to the Form 5500 and Form 5500-SF. Without these
changes to the Form 5500 and related instructions, multiple-employer
plans would have no uniform way to comply with the CSEC Act
requirements and nor would there be any assurance that uniform
information about participating employers in multiple-employer plans
would be available to the public. In addition, the Department would be
hampered in its ability to comply with the Congressional directive in
the CSEC Act to collect the reported information. Moreover, only
multiple-employer plans, which are a relatively small percentage of
Form 5500 Annual Return/Report filers, are affected by this change,\4\
and the requirements are limited in scope to the information
specifically required under the CSEC Act.
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\4\ The Department estimates that 5,527 multiple employer plans
are subject to the requirements of the CSEC Act Amendment (280
defined benefit plans, 4,739 defined contribution plans, and 508
welfare plans).
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Further, reporting the basic information about participating
employers required by the CSEC Act should not be burdensome for
multiple-employer plans because they are already required to maintain a
list of participating employers and records of the contributions made
by each employer. As noted above, the Department's regulation on
content requirements for summary plan descriptions, 29 CFR 2520.102-3,
requires in the case of a plan established or maintained by two or more
employers that the SPD contain a statement that a complete list of the
employers sponsoring the plan may be obtained by participants and
beneficiaries on request and a statement that the list is available for
examination by participants and beneficiaries at the plan
administrator's office. In addition, the Form 5500 Annual Return/Report
currently requires that plans report information on employer and
participant contributions as part of the financial information required
to be filed. Section 107 of ERISA requires the plan administrator to
keep records in sufficient detail to allow the information on the Form
5500 Annual Return/Report to be ``verified, explained, or clarified,
and checked for accuracy and completeness.'' In the Department's view,
this would require the plan to keep records sufficient to identify the
participating employers and the amount of the contributions
attributable to each individual employer, participant or beneficiary.
The Department thus finds for good cause that it would be
impracticable and contrary to the public interest to delay putting the
above described revisions to the Form 5500 and Form 5500-SF required by
the CSEC Act into place until completion of a full notice and public
comment process. For the same reasons, the Department also finds good
cause to adopt an effective date that would be less than 30 days after
the publication in the Federal Register pursuant to the APA. 5 U.S.C.
553(d). The adoption of the changes affecting the 2014 Form 5500 Annual
Return/Report will be effective as of the date of publication of this
document in the Federal Register. The same or related information for
multiple-employer plans will continue to be required to be provided on
the 2015 and later Form 5500 Annual Returns/Reports, but for 2015 and
later, the format for providing this information may be different.
Although the revisions in this document will be effective beginning
with the 2014 Form 5500 and 2014 Form 5500-SF, and related
instructions, the Department seeks comments on this interim final rule.
The comments will be considered in connection with final revisions that
will be adopted in connection with the 2015 or later year forms.
III. Executive Order 12866
This Interim Final Regulation does not constitute a ``significant
regulatory action'' for purposes of Executive Order 12866. Therefore,
this action has not been reviewed by OMB pursuant to the Executive
Order.
IV. Paperwork Reduction Act
In accordance with the requirements of the Paperwork Reduction Act
of 1995 (PRA) (44 U.S.C. 3501 et seq.), the Form 5500 information
collection request (ICR) has been approved by OMB under control number
1210-0110, which currently is scheduled to expire on April 30, 2015. On
September 8, 2014, the Department submitted an ICR revision reflecting
the CSEC Act revision to OMB utilizing the emergency PRA clearance
procedures in accordance with 5 CFR 1320.13. OMB approved the emergency
submission on October 7, 2014.
Based on data from the 2012 Form 5500 filings (the latest year for
which complete data are available), the Department estimates that 5,527
multiple-employer plans are subject to the requirements of the CSEC Act
amendment (280 defined benefit plan, 4,739 defined contribution plans,
and 508 welfare plans). The Department assumes that plan administrators
will comply with the new requirements; therefore, the entire burden is
hour burden.
Reporting the basic information about participating employers
required by the CSEC Act should not be burdensome for multiple-employer
plan administrators, because as discussed in detail above, current
requirements under ERISA already require them to maintain a list of
participating employers and records of the contributions made by each
employer. Therefore, the Department assumes that on average, it will
take a financial professional thirty (30) minutes to comply the CSEC
Act amendments by creating an attachment containing the list of
participating employers, their EINs, and their percentage of total plan
contributions. Based on the foregoing, the Department estimates that
5,527 multiemployer plan administrators will spend approximately 2,764
hours complying with the CSEC Act requirements at an equivalent cost of
approximately $173,000 (2,764 hours times $69 for the
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services of an in-house financial professional).\5\
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\5\ The Department calculated the hourly labor rate using
published survey data from the Bureau of Labor Statistics,
Occupational Employment Statistics Survey (May 2013), and Employment
Cost Index (March 2014) to estimate the cost of benefits in total
compensation. A calculation of the 2014 hourly labor cost for
financial professionals was estimated at $69 an hour including wage,
benefits, and overhead.
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The OMB emergency approval expires on April 30, 2015. Therefore,
contemporaneously with the publication of the interim final rule, the
Department has published a notice elsewhere in this issue of the
Federal Register informing the public of its intention to extend the
OMB approval for three years. The notice solicits comments on the
revisions to the ICR and provides the public with 60 days to comment as
required by 5 CFR 1320.8(d).
V. Changes to the Form 5500 and Form 5500-SF and Instructions
On the Form 5500 and Form 5500-SF, in ``Part I Annual Report
Identification Information''--Box for Multiple-Employer Plan add the
following parenthetical:
(Filers checking this box must attach a list of participating
employer information in accordance with the form instructions).
In the Form 5500 Instructions for Part I Annual Report
Identification Information--Box for Multiple-Employer Plan add the
following instructions as a new second paragraph:
Except as provided below, multiple-employer pension plans and
multiple-employer welfare plans required to file a Form 5500 must
include an attachment using the format below that (1) lists each
participating employer in the plan during the plan year, identified
by name and employer identification number (EIN), and (2) includes a
good faith estimate of each employer's percentage of the total
contributions (including employer and participant contributions)
made by all participating employers during the year. Any employer
who was obligated to make contributions to the plan for the plan
year, made contributions to the plan for the plan year, or whose
employees were covered under the plan is a ``participating
employer'' for this purpose. If a participating employer made no
contributions, enter ``-0-'' in element (c).
The attachment must be properly identified at the top with the
label ``Multiple-Employer Plan Participating Employer Information,''
and the name of the plan, EIN, and plan number (PN) as found on the
plan's Form 5500.
Multiple-employer welfare plans that are exempt under 29 CFR
Sec. 2520.104-44 from the obligation to file financial statements
with their annual report are required to include only a list of
participating employers with the corresponding EIN/PN numbers in
elements (a) and (b) of the ``Multiple-Employer Plan Participating
Employer Information'' attachment included with their Form 5500.
Complete as many entries as needed to report the required
information for all participating employers.
Multiple-Employer Plan Participating Employer Information
[Insert Name of Plan and EIN/PN as shown on the Form 5500]
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(a) Name of participating employer. (b) EIN.............. (c) Percent of Total Contributions.
(a) Name of participating employer. (b) EIN.............. (c) Percent of Total Contributions.
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In the Form 5500-SF Instructions for Part I Annual Report
Identification Information--Box for Multiple-Employer Plan add the
following instructions as a new second paragraph:
Multiple-employer pension plans required to file a Form 5500-SF
must include an attachment using the format below that (1) lists
each participating employer in the plan during the plan year,
identified by name and employer identification number (EIN), and (2)
includes a good faith estimate of each employer's percentage of the
total contributions (including employer and participant
contributions) made by all participating employers during the year.
Any employer who was obligated to make contributions to the plan for
the plan year, made contributions to the plan for the plan year, or
whose employees were covered under the plan is a ``participating
employer'' for this purpose. If a participating employer made no
contributions, enter ``-0-'' in element (c).
The attachment must be properly identified at the top with the
label ``Multiple-Employer Plan Participating Employer Information,''
and the name of the plan, EIN, and plan number (PN) as found on the
plan's Form 5500-SF.
Complete as many entries as needed to report the required
information for all participating employers.
Multiple-Employer Plan Participating Employer Information
[Insert Name of Plan and EIN/PN as shown on the Form 5500-SF]
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(a) Name of participating employer. (b) EIN.............. (c) Percent of Total Contributions.
(a) Name of participating employer. (b) EIN.............. (c) Percent of Total Contributions.
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Signed at Washington, DC, this 30th day of October 2014.
Phyllis C. Borzi,
Assistant Secretary, Employee Benefits Security Administration, U.S.
Department of Labor.
[FR Doc. 2014-26498 Filed 11-7-14; 8:45 am]
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